Dark money

Dark money is a term that refers to funds used to pay for an election campaign that are not disclosed to voters prior to voting. Funds can be spent on behalf of a candidate running in an election, or to influence voting on a ballot question.

Etymology

The term was used by the Sunlight Foundation to describe undisclosed funds that were used during the United States 2010 mid-term election.^[1][2]

Disclosure in US elections

The first federal law requiring disclosure of campaign contributions was passed in 1910. By the late 1970s, virtually all states and the federal government required public disclosure of campaign contributions and information on political donors. Most states and the federal government also required public disclosure of information about donors and amounts spent on independent expenditures, that is, expenditures made independently of a candidate's campaign.

In January 2010, at least 38 states and the federal government required disclosure for all or some independent expenditures or electioneering communications, for all sponsors.^[3]

Yet despite disclosure rules, it is possible to spend money without voters knowing the identities of donors before the election.^[4][5] In federal elections, for example, political action committees have the option to choose to file reports on a "monthly" or "quarterly" basis.^[6][7][8] This allows funds raised by PACs in the final days of the election to be spent and votes cast before the report is due.

In at least one high-profile case, a donor to a Super PAC kept his name hidden by using an LLC formed for the purpose of hiding their personal name.^[9] One super PAC, that originally listed a $250,000 donation from an LLC that no one could find, led to a subsequent filing where the previously "secret donors" were revealed.^[10] However, campaign finance experts have argued that this tactic is already illegal, since it would constitute a contribution in the name of another.^[11]

In addition to PACs, non-profit groups ranging from Planned Parenthood to Crossroads may make expenditures in connection with political races. Since these non-profits are not political committees, as defined in the Federal Election Campaign Act, they have few reporting requirements beyond the amounts of their expenditures. They are not required by law to publicly disclose information on their donors. As a result, voters do not know who gave money to these groups. Reports have disclosed instances where non-profits were managed by close associates, former staff, or a candidates family member, and this has led to concern that the candidates benefiting from their expenditures would be able to know who donated the funds to the non-profit group, but the public would not.^{[12] [13]}

Additionally, such 501 (c) non-profits may transfer funds given to another non-profit or to a Super PAC, making it still more difficult to trace the original source of funds.^[14]

For example, in the 2012 election cycle, one organization, the National Organization for Marriage, or NOM, operated two non-profiit arms that received millions in donations from just a few donors. It in turn funded several different PACs. While these PACs had to disclose that NOM contributed the funds, they were not required to disclose who gave money to NOM.^[15]

On March 30, 2012 a US District Court ruled that all groups that spend money on electioneering communications must report all donors that give more than $1,000.^[16][17] However, this ruling was overturned on appeal.^[18]

In 2013 the advocacy group Center for Responsive Politics identified what it said was $300 million in unreported political spending (dark money) in 2012, one quarter of which they said was connected to the Koch brothers.^[19]

Theory of Required Disclosure

Disclosure of campaign expenditures, contributions, and donors is intended to deter corruption.^[20]

See also

• Independent expenditure
• Issue advocacy versus express advocacy
• Political action committee
• Regulatory capture

References